STORD, the on-demand warehousing software startup targeting the massive shipping industry, has raised $2.4 million in a seed round co-led by Silicon Valley’s Susa Ventures and logistics-focused Dynamo, out of Chattanooga. Engage Ventures, software veteran Chris Klaus (one of the company’s existing angel investors), and Steve Case’s Rise of the Rest also participated in the round.
STORD co-founder and CEO Sean Henry says the round will be used for aggressive hiring, particular in engineering and sales. The company, currently at five team members, plans to hit over 20 by the year’s end.
“You can’t really hit hyper-growth mode with a few hundred thousand in the bank,” explains Henry on their need for additional capital. Prior to this they had raised approximately $230,000 from angels and the Dynamo accelerator, which they went through in the summer of 2016.
He says they have seen inbound sales requests to the point of not being able to keep up with their current team. “Over the last year at any given time we have 60-plus customers in our pipeline, almost all of them inbound. We have 4 different Fortune 500 companies in our pipeline right now.”
That strong market demand has led to a 520 percent revenue growth over the last year, with 24 percent month-over-month volume growth and a 29 percent increase in their customer base monthly.
Henry explains this is because their product and business model solves a large logistical problem for businesses who store and ship products. The shipping industry has seen a major shift over the last two decades from an asset-ownership to a rental model — in 2002, more than half of businesses stored products in their own warehouses. By 2012, that percentage had shrunk to 13 percent.
Instead of owning capital-intensive distribution centers, companies were contracting with third-party warehouses. The typical mid-sized warehousing company owns one to five centers and works with several different businesses as clients; these independent operators own approximately two-thirds of warehouses nationwide, according to Henry.
“The problem we’ve run into is all of those third party warehouses use different software and have different processes,” says Henry. “Some of them use Google spreadsheets, some even use faxes still to do inventory at the end of the month. They have all different operating procedures, different pricing structures, so warehousing is really still a pen-and-paper industry even to the largest Fortune 500 company out there.”
What’s more, his research showed that the average interaction between a company and their warehouse provider required 25 minutes of human interaction. When scaled to a large company shipping tens of thousands of orders a year, that’s millions of dollars worth of employee time.
STORD’s software provides a universal backend for independent warehouse operators to work with clients. Integrated into or replacing their current system, STORD streamlines the operating procedures, data tracking and analytics, and even the pricing for warehouses across the country.
“Now we can give access to enterprises, mid-sized and small businesses to a network of self-serve, same-system warehouses across the country,” explains Henry. They’re already in 100 warehouses across the country.
The system tracks KPIs like on-time shipment rates, damage rates, shipping accuracy rates, so each vendor can see how they’re measuring up month-to-month.
Thus far, they work mostly with mid-sized companies who can use STORD to scale their shipping network countrywide to the size of a Fortune 500 carrier.
However, they’re also beginning to work with those large enterprises. Henry says that was the primary reason they joined Engage, which counts 10 large Atlanta companies, including logistics giants like UPS, Home Depot, and Delta, along with Goldman Sachs and Invest Georgia, as financial backers.
“Enterprises are really looking for us to bring insight, visibility, and control to their warehousing. They don’t want to be using pen and paper tracking.”
“Stord saw the unique opportunity to take a massive, fragmented industry like warehousing and distribution and win by owning the customer relationship and the software rather than owning the physical asset itself,” said J.D. Vance, Managing Partner of Revolution’s Rise of the Rest Seed Fund, in a statement.
21-year-old Henry, who was named to last year’s Forbes 30 Under 30 list in the Manufacturing and Industry category, says they have an opportunity to scale to become “the largest distribution company in the globe, driven by software instead of owning the assets.”
“Over the next year we’re largely working on crafting our market playbook. We’re expanding on what we’ve already learned and building upon that.”